Socially Responsible Investing (SRI) is a method where investors, or Socially Responsible fund managers, focus on environmental, social, and governance (ESG) factors when selecting companies to invest in. The ultimate goal is still to create an investment fund or portfolio that achieves financial returns – but to do it in a way that’s ethical and sustainable. In recent years, SRI has become popular among investors seeking to align their portfolios with personal values.

A few key factors have driven the growing interest in SRI:

1. There’s an increased awareness of global challenges such as climate change, social inequality, and corporate governance issues.
2. Access to information is much more prevalent and helps investors form values-driven opinions on different companies and how they impact the world.
3. SRI fund availability has increased significantly and is more accessible to the everyday investor.

This guide will explore the fundamentals of SRI, its benefits, and how to get started!

What is Socially Responsible Investing (SRI)?

Socially Responsible Investing is essentially a culmination of three different ways to “screen” your investments:

1. Environmental factors: How a company’s actions impact the environment. This could mean their carbon emissions, production best practices, etc.
2. Social factors: How a company manages its relationships with employees, shareholders, and customers/clients.
3. Governance factors: How a company runs its internal operation. This could include how executives are compensated, what kind of audits are run and at what frequency, etc.

A Socially Responsible Investment philosophy focuses on screening out different companies and industries that conflict with an investor’s values or score poorly according to ESG factors. Some SRI funds also use positive screening to include companies that actively demonstrate strong ESG performance. Taking it a step further, some investors pursue impact investing. This is a way of directing funds to address specific social or environmental issues and concerns or supporting organizations that do so.

Examples of socially responsible companies often include those focused on renewable energy, sustainable products, or strong labor practices.

Benefits of Socially Responsible Investing

Socially Responsible Investing comes with several benefits for investors, including:

1. Values Alignment: SRI allows investors to support companies that reflect their ethical standards and avoid those that don’t.
2. Potential For Returns: Contrary to some misconceptions, many SRI funds have demonstrated competitive performance compared to traditional investments. Of course, as with all investments, nothing is guaranteed. It’s important to remember your unique goals and structure your portfolio accordingly.
3. Leaving a Legacy: SRI is often viewed as a way for people to positively impact the causes they care about – leaving a living legacy and putting their wealth to work in a way they feel good about.
4. Risk Management: Companies who score well according to ESG factors are often better positioned to navigate future challenges and regulations. In other words, companies that are run well, treat their employees fairly, and focus on their environmental impact set themselves up for potential future success.

Your motivation to pursue SRI may differ from someone else with a similar portfolio – and that’s the beauty of this method. You are empowered to tailor your portfolio to your unique personal values and financial circumstances or goals.

How to Get Started With SRI

The good news is that getting started with Socially Responsible Investing is easier than ever. There are an increased number of SRI specific funds available, and many advisors (including our team at Collier Sustainable Wealth Management) specialize in this investing methodology.

Here are a few ways you can hit the ground running, and start implementing SRI today:

1. Determine your unique investment goals and personal values. Take time upfront to identify the issues that are most important to you, and what your financial goals are. Both of these factors can help you to determine which SRI funds best suit your needs.
2. Research different socially responsible funds and companies. Explore SRI mutual funds, ETFs, and individual companies that match your criteria. There’s so much information available, so don’t get overwhelmed or discouraged! Getting a basic understanding of what’s out there is a great place to start.
3. Evaluate fund performance, fees, and ratings. Compare SRI options using financial metrics and ESG ratings from providers like Morningstar or MSCI. Fees, in particular, are something to keep an eye on. Some SRI funds have higher-than-average fees, and being aware of this can help to save you money in the long run when making investment decisions.
4. Work with a financial advisor specializing in SRI. You don’t have to go it alone. Consider partnering with Collier Sustainable Wealth Management to develop a tailored SRI strategy.

The Role of Financial Advisors in SRI

Guidance from experienced professionals is crucial when navigating the complex world of SRI. Financial advisors specializing in this area can provide valuable expertise and support.

At Collier Sustainable Wealth Management, we offer comprehensive SRI services, including:

• Portfolio construction aligned with your values and financial goals
• Ongoing monitoring and rebalancing of SRI investments
• Education on emerging SRI trends and opportunities
• Integration of SRI principles with overall financial planning

Our team’s expertise in SRI can help you make informed decisions and maximize the impact of your investments while working towards your financial objectives.

Is SRI Right For You?

Ready to take the next step in your SRI journey? Schedule a consultation with Collier Sustainable Wealth Management today. Our team of experts is here to provide personalized guidance and help you build a socially responsible investment portfolio that aligns with your values and financial goals.

Meris Collier, CFP®

COLLIER, Sustainable Wealth Management

1833 N 105^th Street #101

Seattle, WA 98133

(206)805-1770

www.collierswm.com

^{COLLIER, Sustainable Wealth Management (“Collier”) is a dba of Axxcess Wealth Management, LLC (“AWM”), a SEC registered investment advisor.} 

^{The information provided is for educational and informational purposes only and does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your attorney or tax advisor.}

^{All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.}

^{Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.}

^{When an investment process considers environmental, social, and governance factors (“ESG”), the advisor may choose to avoid investments that might otherwise be considered or sell investments due to changes in ESG risk factors as part of the overall investment decision process. The use of environmental, social, and governance factors may impact investment exposure to issuers, industries, sectors, and countries, potentially resulting in higher or lower returns than a similar investment strategy without such screens.}

^{This material is presented solely for informational purposes, and nothing herein constitutes investment, legal, accounting, or tax advice, or a recommendation or solicitation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment or strategy is suitable for a particular investor. Investing entails risks, including possible loss of principal. This document should not be construed as a recommendation to purchase or sell any particular securities. Market conditions can vary widely over time and can result in a loss of portfolio value.}

^{Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.}